In this paper, the concept of social capital is introduced and illustrated, its forms are described, the social structural conditions under which it arises are examined, and it is used in an analys...

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Social Capital in the Creation of Human Capital

This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of economic growth by assuming a standard neoclassical production function with decreasing returns to capital. Taking the rates of saving and population growth as exogenous, he showed that these two vari- ables determine the steady-state level of income per capita. Be- cause saving and population growth rates vary across countries, different countries reach different steady states. Solow's model gives simple testable predictions about how these variables influ- ence the steady-state level of income. The higher the rate of saving, the richer the country. The higher the rate of population growth, the poorer the country. This paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Examining recently available data for a large set of countries, we find that saving and population growth affect income in the directions that Solow predicted. Moreover, more than half of the cross-country variation in income per capita can be explained by these two variables alone. Yet all is not right for the Solow model. Although the model correctly predicts the directions of the effects of saving and

/pdf/a-contribution-to-the-empirics-of-economic-growth-27cl5gkqam.pdf

A Contribution to the Empirics of Economic Growth

Large sample properties of generalized method of moments estimators

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

/pdf/endogenous-technological-change-4yzdlw043b.pdf

Endogenous Technological Change

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported, and instead, the equilibriumis one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

https://papers.ssrn.com/sol3/Delivery.cfm/nber_w3210.pdf?abstractid=226703&mirid=1

A method is described for constructing all Pareto-optimal allocations for a dynamic economy with many heterogeneous consumers, under certainty, in which both the technology and consumer preferences are recursive but preferences need not be additively separable over time. Optimal (perfect foresight competitive equilibrium) allocations are obtained through the study of a dynamic program. For an economy with one consumption good, sufficient conditions are given for the existence of a unique interior stationary distribution of consumption and wealth. For a two-person exchange economy, sufficient conditions are given for the global asymptotic stability of the unique interior stationary point.

Optimal Growth with Many Consumers

Anne Krueger and Baran Tuncer (1982) present some interesting results on rates of effective protection and of productivity growth for various sectors of the Turkish economy. From these measures, the authors "develop an empirical test for the validity of the infant industry argument" (p. 1149). Being perhaps the first attempt to test directly the commonly cited infant industry grounds for protection, the paper by Krueger and Tuncer is especially valuable. Clearly, the approach is readily applicable in other contexts for further testing but, before so doing, it seems worth pursuing certain implications of that test a little more precisely. The test proposed by Krueger-Tuncer for the validity of the infant industry argument is founded on the premise that "a necessary (but not sufficient) condition is that costs in (temporarily) assisted or protected industries should have fallen over time more rapidly than costs in nonprotected or less-protected industries" (p. 1144). "The test is simple and straightforward: input per unit of output must fall more rapidly in more protected industries if there is to be any rationale for infant industry protection. In the Turkish case, there was no such tendency over the period covered" (p. 1149). But is this a sufficient test of the necessary conditions? The case for infant industry assistance is derived either from an externality associated with learning-by-others-doing or learningby-own-doing combined with a capital market failure. For the instance of within industry learning, this is commonly modelled by inserting the integral of past output as an argument in the production function, which may be written for industry i at time t:

https://www.jstor.org/stable/pdfplus/572.pdf

An Empirical Test of the Infant Industry Argument: Comment

The authors use new data from Brazil and Mexico to analyze relationships linking economic development, the size distribution of manufacturing plants, and exposure to industrial pollution. For lack of data, prior work in this field has been limited largely to water pollution and medium-size plants. This study examines air pollution and encompasses small plants (with 1 to 20 employees) as well as medium-size and large plants. Four main questions are addressed (with answers from plant-level data): a) Are small plants more pollution-intensive than large facilities? Clearly, yes. b) Are there proportionately more small plants in low-income regions? The answer is yes, in thousands of Brazilian municipalities. Small plants dominate poor regions and are a relatively low source of employment in high-income areas. c) Is industry more pollution-intensive in low-income regions? In Brazil, yes. For each municipality, the authors estimate the share of the six most pollution-intensive ("dirty") sectors in total industrial activity. They find that the dirty-sector share declines continuously with increases in municipality income per capita. d) Do poor areas suffer more than wealthy areas from industrial air pollution? Paradoxically, no. The risk of mortality from industrial air pollution is much higher in the top two income deciles among Brazil's municipalities and the great majority of projected deaths is attributable to emissions from large plants.The scale of large-plant emissions dominates all other factors. Lower-income areas suffer much less from industrial air pollution in Brazil, despite the greater emissions-intensity of smaller plants and the prevalence of smaller plants in lower income areas.

Small manufacturing plants, pollution, and poverty: new evidence from Brazil and Mexico

This paper presents an empirical test of the proposition that control of a monetary aggregate will generate a rise in its velocity.The test is carried out utilizing the Canadian experience of controlling Ml growth from 1975:3 to 1982:3. Section One of the paper presents evidence of the instability of the Canadian demand from Ml money since 1975:3. Section Two develops a specific form of the proposition which emphasizes the role of asset substitution between classes of chartered bank deposits. A relative asset demand equation is derived from a wealth maximization model subject to a technological transactions constraint and this equation is estimated from 1961 through 1982.The results lend support to the proposition that central bank control of Ml generated a rise in Ml velocity.

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Financial Innovation and the Control of Monetary Aggregates: Some Evidence from Canada

This lecture surveys recent models of growth and trade in search of descriptions of technologies that are consistent with episodes of very rapid income growth. Emphasis is placed on the on-the-job accumulation of human capital: learning by doing. Possib le connections between learning rates and international trade are discussed Copyright 1993 by The Econometric Society. (This abstract was borrowed from another version of this item.)

Robert E. Lucas

Papers

Optimal Growth with Many Consumers

An Empirical Test of the Infant Industry Argument: Comment

Small manufacturing plants, pollution, and poverty: new evidence from Brazil and Mexico

Financial Innovation and the Control of Monetary Aggregates: Some Evidence from Canada

Making a Miracle